How to Start a Clothing Company
12 min. read
Updated November 13, 2023
Have you ever found yourself dreaming of designing clothes?
Do you have a great idea for a line of business-casual womenswear that you think everyone would love, or maybe you’d really like to design your own athleticwear brand? Is there a specific hole in the clothing market that you think you know how to fill? If so, starting a clothing business might be a great path to explore.
If you’re wondering how to start a clothing company, look no further: We’ve put together a complete guide to help you get started.
Whether you dream of opening up a brick-and-mortar retail shop, setting up an online store, or designing clothes and selling them wholesale, you’ll find the necessary information on how to start a clothing company here.
Step 1: Planning your clothing business
Create a plan for your business
First off: You’ll need a business plan.
Now, the idea of a formal business plan can understandably be intimidating; it can feel like sitting down and writing a novel.
However, it doesn’t have to be like that. Depending on the type of funding you’re seeking (we’ll get to that in a minute), your business plan doesn’t necessarily have to be elaborate.
If you’re not seeking bank or investor funding, you can probably get away with a lean business plan. We’ve also written extensively on how to pick what type of business plan to write, as well as tons of resources on how to write great business plans, which I’ll link to below.
For more info how writing a clothing company business plan:
- How to Write a Business Plan in Under an Hour
- How to Write a Business Plan
- A Standard Business Plan Outline
- Free Clothing Sample Business Plans
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Determine how you’ll be funding your business
When starting a clothing company, you’ll likely be dealing with either bank loans, investment from friends, family, or your own savings, crowdfunding, and generally bootstrapping your business.
“We use advanced fabrics that are comfortable but polished, are packable, and require less frequent washing,” she says. She and her partner Yehua Yang took their business idea to Kickstarter, where they raised 150 percent of their goal.
Others took to starting a clothing company by bootstrapping, using income generated from a variety of sources. “All the money has come in tiny increments as the business has basically funded itself,” says Sara Duke.
She explains: “I went to Ryerson and, as a student, acquired all of the necessary machinery for my own personal tailor shop and when I left my industry job, I had already booked my first custom project, for which I took a deposit. This and some holiday pay (maybe $800) sustained me for the first couple of months. Then, when I started the line a bit later, I invested a little less than $200 in fabric and it has all grown from that.”
One thing is certain: You’ll be unlikely to receive venture capital funding, as venture capital firms generally only invest in businesses that offer the potential for a high return, quickly. Securing angel investment is also infrequent, as angel investors also hope to see a quick (and sizable) return on investment; finally, small business loans, while possible, are not incredibly common for new clothing companies.
However, though you might have less funding options than, say, a traditional tech startup, don’t despair. Your best bet? Crowdfunding, personal income or loans from friends and family, and bootstrapping. I’ve included resources below, to help you get started.
For more information on funding a clothing company:
- How to Get Your Business Funded
- The 10 Best Side Businesses to Fund Your Startup (Plus One Unexpected Suggestion)
- My 13 Favorite Alternative Funding Options
- How to Ask Family and Friends to Fund Your Business
- Costs of Starting a Clothing Company
Do your market research
Who are you starting a clothing line for? Who is your ideal customer, and what does your target market look like?
“The most important step to not overlook is defining your customers and your line,” says Amy Olson, designer and owner of Kuhfs.
She advises asking the following questions: “Who are you targeting, who are you making these clothes for (they’re not for everyone), where do you think your line will hang in department stores or boutiques, what is your customer’s price point threshold, what is your line about (everyday style, high end, preppy)? You have to know your customer and who you are making these clothes for.”
We’ve covered market research, target marketing, and creating a user persona in-depth here on Bplans, so make sure to check out the articles below for the full rundown on how to do your market research.
For more information on doing market research for a clothing company:
- How to Do Market Research
- Practical Market Research Resources for Entrepreneurs
- How a Buyer (or User) Persona Can Improve Your Business
- What Is Target Marketing?
Focus on developing your brand
Along the same lines as defining your market, articulating your brand is a very important part of start a clothing company.
Developing a brand will hugely impact what the overall image for your clothing company is. Designing clothes is all well and good, but you want to make sure your branding is solid from the start.
To help you out with developing your brand, I’ve included plenty of resources on branding your business. We’ve covered the topic extensively, especially within our Big Brand Challenge, which walks you through the entire process.
For more information on branding your clothing company:
- Who Are You: Day 1 of the Big Brand Challenge
- The Definitive Guide to Building a Brand
- 4 Reasons to Brand Your Business
- Your Brand’s Tone of Voice: Why It Matters and How to Craft It
Decide if you’ll be selling retail or wholesale
Do you also plan on opening up your own shop (whether online, brick-and-mortar, or both), or do you only intend on selling wholesale to other stores?
This will obviously depend largely on your goals. Do you want to run and operate a physical storefront? Do you want to sell only online? Do you hope your clothing line will be carried in other boutiques? Answering these questions will help you make this decision.
For more information on deciding if you’ll be selling your clothing line retail or wholesale:
- How the Clothing Wholesale and Retail Markets Work
- Ask an Expert: Better to Sell Retail or Wholesale?
- How to Decide Between Wholesale and Retail Sales
- Pricing Your Clothing Line: What to Charge Online Versus at a Boutique
Step 2: Making it legal
Select your business structure
What type of business do you plan on starting?
If you’re starting a clothing business on your own, you’ll likely be starting a sole proprietorship, but you may also want to look into starting an LLC, or a partnership if you’re working with a partner. We’ve covered how to do all of this extensively in other articles, so don’t overlook the following resources.
For more information on choosing the business structure for a clothing company:
- The Complete Guide to Choosing Your Business Structure
- Sole Proprietorship Basics
- Partnership Basics
- LLC Business Basics
Pick a name for your clothing company
You might already have your dream name picked out for your clothing company, but if not, don’t sweat it—it’s not uncommon for choosing a business name to take a little brainstorming.
I’ve written multiple articles on the process of choosing a name for your business, complete with resources to help you with that process, so check those out below.
For more resources on how to choose a name for a clothing company:
- How to Name Your Company
- Resources and Tools to Help You Name Your Business
- The Complete Guide to Registering Your Business Name
Apply for a Business Tax Wholesale Number, a tax ID permit, and a Reseller Wholesale License
Depending on whether or not you are opening a retail-only business or a wholesale business, the specific licensing you’ll need will vary.
In addition, the licensing you’ll need will vary by state; in Oregon, for instance, as there is no sales tax, business licenses serve as a substitute for a sales tax ID. Check with your local Secretary of State’s website for more info on your specific state.
For more information on the permit and licensing process:
- How to Apply for a Federal Tax ID Number
- How and Where to Obtain Business Licenses and Permits
- What Is the Difference Between a State Sales Tax ID Number and a Wholesale Account Number?
- How to Get a Business Tax Wholesale Number
- How to Get a Reseller Wholesale License
Determine how you plan to handle any intellectual property concerns
Is the name and logo you’ve chosen for your business something that you feel should be trademarked?
Before you go too much further down the road of starting a clothing company, make sure you’ve looked into intellectual property, and determined if you need to file for a trademark or any copyrights.
Step 3: Choosing manufacturers and suppliers
Decide if you want to stay local, or outsource manufacturing overseas
While finding manufacturers overseas is often much more inexpensive, it can be more challenging as it throws potential language and cultural barriers into the mix.
“Finding a manufacturer was straight-forward once I decided that producing it locally was important to me,” says Georgia Mae. ”Too much of manufacturing has gone overseas and I really wanted to support the all-but-extinct manufacturing sector here at home.”
Laurie Elyse, of Laurie Elyse Design, agrees. “People often overlook the companies they trust with manufacturing. It’s far too easy in the ‘faster, cheaper, more society’ to end up supporting horrible labor conditions,” she says.
“Many people trying to launch lines are looking to do things as cheaply as possible, and sadly they don’t ever see the suffering it causes.”
She advises: “To find trustworthy sources, look closer to home and spend more on quality when it comes to materials and manufacturing. Visit the work room or factory, get references, start your own work room if funds permit, or do extensive background checks.”
Attend a trade show
Lisa Chu, owner of Black N Bianco Kids Apparel, recommends attending a trade show to get a sense of who is available to manufacture your clothing line. “Attending a trade show like MAGIC sourcing will be the first step to finding a manufacturer that will fit your needs,” she says. “They offer a matchmaking service for attendees who are new to the apparel industry.”
Do your research—lots of it
There’s no other way of putting it: Finding a manufacturer will require tons of research.
Who you go with will depend on what kind of clothing line you are designing, where you are located, where you hope your manufacturer is located, what your price range is, and so much more.
Step 4: Finding a location
If you plan on opening up a brick-and-mortar business, you’ll need to scout out a location for your clothing company.
Where you choose to set up shop will largely depend on picking an area with the best access to your target market that fits within your budget, so make sure to do plenty of research on where your market likes to shop, and what you can afford.
Step 5: Picking a payment system
Set up a merchant bank account
A merchant bank account is a special kind of bank account; it is responsible for taking the funds from your customers once they have paid for their purchase, and holding them, before transferring them to your account.
If you plan on setting up a merchant bank account, your current bank likely has a merchant account solution. However, it is worth noting that you can also use a service like PayPal and omit the need for a merchant bank account entirely.
Choose a POS system and/or an online shopping cart
If you are setting up a retail-only business, you’ll just need to worry about choosing a physical POS (or point of sale) solution for your business. However, if you’re like most, you’ll probably be planning to sell your products online as well as in-store—or maybe online completely.
Do your research to determine what kind of POS system and online shopping cart is right for you; there are tons of options, and what you pick will depend on the price of transactions you will be processing,
Step 6: Choosing a shipping solution
If you’re planning on setting up an online store (more on that in a minute), you’ll want to look into what shipping carrier you’ll use for your clothing company.
There are plenty of things to consider when choosing your shipping solution; the price, where you’ll be shipping (are you shipping your products internationally?), and what size and weight of products you’ll be shipping will all make a difference in your decision of which carrier to go with.
Step 7: Hiring employees
If you plan on setting up a brick-and-mortar retail location, you’ll need to hire employees for your store. Even if you don’t plan on opening a physical storefront, depending on the scale of your clothing company, you may decide that you need to hire on additional help anyway.
Step 8: Marketing your business and establishing an online presence
This last step is really an ongoing process: You’ll be focusing on building a website (if you haven’t started this step already), setting up social media accounts, and determining where you will put the majority of your marketing efforts.
For a new clothing business with a limited budget, social media marketing will be your best friend. Check out my recent guide to opening an online boutique—I’ve included plenty of information about how to use social media to your advantage for marketing.